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Estimates of the Future Number of Companies by Region

Author

Listed:
  • Yoshiaki Murakami

    (Lead Economist, Japan Finance Corporation Research Institute)

  • Naomi Kodama

    (Associate Professor, Graduate School of Economics, Hitotsubashi University)

  • Yoshio Higuchi

    (Professor, Faculty of Business and Commerce, Keio University)

Abstract

This paper projects the number of companies that will play a vital role as a source of labor demand and the number of employees for each prefecture in Japan until 2040. The noteworthy point of this paper lies in the fact that it utilizes the population decline and the change in age structure of the population in each region as the driving factors of company openings and closings and then estimates the number of employees using companies f demand for labor. According to our estimates, the number of companies and employees will fall from 4,025,000 and 58,457,000, respectively, in 2015 to 2,956,000 and 45,981,000 in 2040. The rate of decline is not uniform across the nation; in fact, the concentration of companies and employees in major urban areas will continue to rise. In addition, the rate of decline in companies and employees is greatest until around 2025, when many current company managers will be retiring. As a result, until around 2025, almost all prefectures in Japan will temporarily experience sharper rates of decline in the number of employees than in the working - age population. The excess supply of labor will be particularly noticeable in urban areas. By 2040, the labor market will go back to another period of tightness similar to that experienced in 2015. Therefore, until around 2025, it will be critical to provide focused support for business succession, so as to prevent business closures caused by managers f retirement. Our simulation suggests that focusing support for businesses on start - ups by women and retired elderly would be effective to increase the number of new company start - ups.

Suggested Citation

  • Yoshiaki Murakami & Naomi Kodama & Yoshio Higuchi, 2018. "Estimates of the Future Number of Companies by Region," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 14(1), pages 81-114, February.
    • Handle: RePEc:mof:journl:ppr14_01_04
    as

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    File URL: https://www.mof.go.jp/english/pri/publication/pp_review/fy2017/ppr14_01_04.pdf
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    References listed on IDEAS

    as
    1. KWON Hyeog Ug & Kim YoungGak & FUKAO Kyoji, 2008. "Why Has Japan's TFP Growth Recovered?: An empirical analysis based on the basic survey of Japanese business structure and activities (Japanese)," Discussion Papers (Japanese) 08050, Research Institute of Economy, Trade and Industry (RIETI).
    2. Naomi Kodama & Kazuhiko Odaki, 2011. "Gender difference in the probability of success in starting business turns negligible when controlling for the managerial experience," Applied Economics Letters, Taylor & Francis Journals, vol. 18(13), pages 1237-1241.
    3. Kwon, HyeogUg & Fukao, Kyoji & Kim, YoungGak, 2007. "Patterns of Plant Entry and Exit and Productivity in Japanese Manufacturing Industries," Economic Review, Hitotsubashi University, vol. 58(3), pages 231-245, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    business start - ups; business closures; business succession; number of companies; labor supply;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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